As highlighted in this prior post , in 2019 Daisy Rafoi-Bleuler (a citizen of Switzerland and partner in a Swiss Wealth Management firm) became the latest individual to be criminally charged with Foreign Corrupt Practices Act and related offenses for allegedly directing bribes to various individuals at PDVSA (Venezuela’s state-owned and state-controlled energy company).
According to the DOJ, Rafoi opened Swiss bank accounts and facilitated financial transactions for various co-conspirators to help facilitate the bribery scheme.
As highlighted in this post , in late October 2020 Rafoi-Bleuler filed a motion to dismiss the criminal charges. In summary fashion, the motion argued: “The indictment of Ms. Rafoi-Bleuler, a citizen and resident of Switzerland, continues the worrisome trend by the Department of Justice to stretch the reach of the United States’ criminal statutes beyond Congress’ intent in an attempt to police the world. Despite having violated no laws in Switzerland and having no contact with the United States …, Ms. Rafoi-Bleuler finds herself hailed into a U.S. court in contravention of clear statutory language, legal precedent, and international norms. Courts have increasingly, and correctly, rejected such attempts by the government and this Court should continue as well …”.
Recently, Judge Kenneth Hoyt (S.D. Tex.) granted the motion to dismiss.
In summarizing the positions of the parties, the opinion states:
“To assert authority to prosecute the defendant, the government charges that the defendant is “a person” who acted as an “agent” for a “domestic concern,” all as defined by the FCPA. The government claims that the defendant “knowingly” engaged in and assisted PDVSA-S [PDVSA Services, Inc. – a United States-based and wholly-owned affiliate of PDVSA located in Houston, Texas] and Bariven [another wholly owned subsidiary of PDVSA], and her codefendants to conduct financial transactions in “interstate commerce”, the proceeds of which were derived from the Venezuelan kickback/bribery scheme. These allegations also form the bases for the government’s assertion that the defendant conspired with her codefendants to commit money laundering. The government contends that the defendant, as an “agent” of “domestic concerns,” conspired to created false justifications for the deposit of kickback/bribery proceeds and used email and other instruments of interstate commerce to communicate with the domestic concerns, several of which are codefendants, in order to carry out the money laundering offense.”
“The defendant seeks dismissal of Counts One, Two, and Three of the [Indictment], as they relate to her, generally, on three bases. She asserts that the [Indictment]: (1) fails to allege or establish that the government has jurisdiction to prosecute her; (2) is unconstitutionally vague concerning her status as an “agent”; and (3) fails to state a prosecutable offense. The defendant’s arguments rest, in part, on the uniqueness of her circumstances as a foreign national who, as she argues, is unconstrained by the laws of the United States.
The defendant explains that she is a principal and owner of a Swiss wealth management firm that has no prior association or affiliation with the United States or the codefendants. She notes that she has not been accused of violating Swiss law and, in fact, asserts that she has conducted herself, with regard to the codefendants, “in strict accordance with Swiss anti-money laundering and other financial laws and regulations.” Hence, all services provided by her firm on behalf of the codefendants were provided as professional services and not pursuant to an agency relationship.
More particularly, the defendant contends, the FCPA and the MLCA do not apply to her because any acts on her part were extraterritorial and are in no wise connected to the United States. Therefore, she argues, her conduct falls outside the reach of the FCPA and the MLCA, which are not extraterritorial statutes. Along that same argument line, the defendant contends that the [Indictment’s] allegations concerning her acts, in particular, do not support a finding that she was an agent of a domestic concern. Notably, the [Indictment] does not charge that she knowingly or intentionally involved herself in the underlying Venezuelan Scheme at any time. Hence, the [Indictment] fails, as against her, because the United States’ courts lack jurisdiction over her.
Lastly, the defendant alleges that Counts One and Three are defective because the SSI fails to establish that she was involved in the alleged substantive money laundering offense, or conducted transactions in the United States. For these reasons, and those more expansively recorded in her memorandum, the defendant also seeks dismissal of Counts One and Three of the [Indictment].”
The judge summarized the government’s position as follows:
“The government argues that the defendant engaged in “a bribery and money laundering scheme” when she assisted a group of United States businessmen and current or former residents to launder and conceal “the proceeds of their bribery scheme through the international financial system, including banks in Switzerland.” According to the [Indictment], the scheme arose out of energy contracts “corruptly” secured by vendors, through the codefendants, with the assistance of PDVSA officials and employees.
As its primary argument against the defendant, however, the government contends that she is an “agent” of a “domestic concern” and is currently a “fugitive.” Therefore, the Court should refuse to address the defendant’s motion to dismiss based on the teachings of the “Fugitive Disentitlement Doctrine.” In this regard, the government asserts that, after having been served with extradition document, provided a hearing, and ordered to not leave Italy, the defendant left and has earned the status of fugitive. Therefore, as a fugitive, the defendant should not be afforded the benefits of the courts of the United States.
The government also asserts that, assuming the defendant’s conduct does not amount to actual flight, it, nevertheless, constitutes “constructive flight.” In this regard, the government argues that the fact that the defendant fled Italy, and not the United States, is of no consequence because she was forbidden by the Court of Appeals of Milan from leaving its jurisdiction. As such, the government argues that her conduct constitutes constructive flight. Therefore, the Court should refuse to address the defendant’s motion to dismiss based on the strictures of the Doctrine, and if addressed be denied.”
As to the government’s Fugitive Disentitlement Doctrine, the court stated:
“In light of the defendant’s claim that the Court lacks jurisdiction over her because the term “agent” renders the FCPA unconstitutionally vague, and because the FCPA’s and the MLCA’s extraterritorial reach do not necessarily extend to the defendant, the Court will address the applicability of the Fugitive Disentitlement Doctrine.
Logic dictates that if the government cannot prosecute a foreign national under either of the statutes, it cannot lawfully issue a warrant for an arrest under the FCPA or the MLCA. These poignant arguments dictate that the Court exercise its inherent powers and address the defendant’s lack of jurisdiction claim.”
The court then stated (certain non-FCPA related citations omitted):
“Jurisdiction over the defendant under the FCPA rests in whether the government can establish that the defendant was an “officer, director, employee or agent” of a domestic concern. Congress has determined that the FCPA does not apply extraterritorially to a foreign national beyond these four categories. 15 U.S.C. § 78dd; see also Hopkins I, 902 F.3d at 78. [A footnote then states: Outside of those categories, the FCPA applies to a foreign national only if she committed part of the crime while in the United States. Id. at 85 (citing 15 U.S.C. § 77-d(3)(a)). However, because the [Indictment] does not allege that the defendant conspired to violate the FCPA in the United States, section 77-d(3) does not apply to her.].
The government asserts that the defendant was an agent of a domestic concern. In this case, however, agency is more than a fact to be proved as part of a criminal act; it is jurisdictional. Hence, agency does not exist simply because the government alleges in the [Indictment] that the defendant committed certain acts. Agency must be established, apart from the facts that support the charge. Agency, in this context, raises a question of law that must be established in a way that satisfies the jurisdictional requirements of the statute.
When there is no allegation that an agent of a domestic concern acted unlawfully while in the United States, establishing that agency exists as the jurisdictional basis for a criminal charge requires direct evidence of an agency relationship, apart from other types of professional relationship. As a matter of law, it requires undisputed evidence of mutual assent and control over the details of the person and agency, such that the principal controls the details over the assignment. Absent direct or undisputed evidence, an agency does not exist.
It is conceded by the government that the defendant as a foreign national and has no ties to the United States. The “ties” that the government relies upon are communications through the interstate commerce. This approach does not present direct evidence that the defendant was an agent, as a matter of law. Nevertheless, the government points to acts by the defendant contained in [various paragraphs of the Indictment]. These recorded acts, allegedly committed by the defendant in behalf of the codefendants, specifically related to the codefendant’s conduct committed in Venezuela and the United States. They do not point to any act by the defendant committed in either nation16. Hence, no agency relationship is established in the United States by the alleged acts.
The government’s reliance on 18 U.S.C. § 371, the conspiracy statute, to connect the defendant to the underlying Venezuelan bribery/kickbacks scheme is problematic. The government recognizes that the alleged conspiracy relies on a substantive underlying offense as its basis.
[T]he government postulates that “a person may be guilty of conspiring although incapable of committing the objective offense,” or in this case, incapable of violating the FCPA.
Neither [of the cases cited by the DOJ] supports the government’s position. The general principle, already recognized in common law concerning conspiracy and accomplice liability, teaches that a defendant may commit the offense of conspiracy even though incapable of physically committing the objective offense. There are exceptions to this general principle but, more importantly, the principle does not apply here. See Hoskins I, 902 F.3d at 78. As a general rule, accomplice liability may exist where Congress criminalizes an act that necessarily requires the participation of two persons, but chooses to punish only one party to the offending conduct. United States v. Castle, 925 F.2d 831, 833 (5th Cir. 1991) (citing Gebardi v. United States, 53 S.Ct. 35, 37 (1932). However, the general rule, as applied in Gebardi, contemplates instances in which courts have jurisdiction over the person even though she is excluded from prosecution Another instance closer to the facts in this case exists where a foreign official accepts a bribe from a domestic concern. Under the FCPA, a foreign official who accepts the bribe cannot be prosecuted for the offense of bribery, even though his conduct could be prosecuted were he to participate in the criminal conduct while in the United States. Castle, 925 F.2d at 836. It is clear that, absent one of the four enumerated relationships to a domestic concern, the FCPA intends to criminalize the conduct of a foreign person only to the extent such conduct occurs while the person is present in or where she has previously established ties to United States. Castle, 925 F.2d at 833, 836; see also Hopkins I, 902 F.2d at 78.17
Absent evidence of congressional intent, this Court simply lacks jurisdiction over a foreign national. It would be ill-advised for this Court to presume that Congress intended to fundamentally change the relationship between the United States and other Nations other than doing so explicitly, or by treaty. Cf. Burrage v. United States, 571 U.S. 204 (2014).19 Likewise, § 2, the aiding and abetting statute, does not assist the government in this endeavor. The logic of the law teaches that if the government lacks jurisdiction to prosecute a person based on the substantive offense, it cannot do so by circumvention, under the aiding and abetting statute. Hoskins I, 902 F.3d at 96–97.”
Under the heading “Vagueness Renders the Term Agent Unconstitutional,” the court stated:
“Apart from the Court’s determination that it lacks jurisdiction over the defendant under the FCPA and the MLCA, the Court finds merit in the defendant’s claim that both the FCPA and the MLCA are unconstitutionally vague as applied to her. It is clear that Congress did not intend that criminal jurisdiction for charges under either the FCPA or the MLCA be established simply by proof of the elements of the offense. To prosecute the defendant, the government must show either that the defendant was intimately and separately connected to a domestic concern in the United States such as by employment, as an officer, director or shareholder, or by an established agency relationship that occurred in the United States.
Because none of the above relationships has been established, the defendant argues that the term “agent” is so vague that, as applied to her, it is unjustified and violative of the “due process” clauses of the federal Constitution. To prevail on an “as applied” challenge to the constitutionality of a statute, the defendant must show that the statute is unconstitutional, by its scope or as applies to her conduct. The defendant’s challenge raises the issue of vagueness as to what constitutes an agent.
Under the vagueness doctrine, courts are forbidden from enforcing “a statute which either forbids or requires the doing of act in terms so vague that [a woman] of common intelligence must necessarily guess at its meaning [and where courts may] differ as to its application.” That principle is also relevant in instances where the accused’s conduct is not prosecutable in the accused’s own country. The application of the term “agent” to the defendant, as a basis for jurisdiction, is such a novel application that no court has interpreted the statute or rendered a judicial decision that fairly discloses the manner in which the term may be applied to establish jurisdiction. That fact alone establishes the vagueness of the term.”
In conclusion, the court stated:
“The test for the validity of this SSI, as applied to the defendant, rests in whether it conforms to minimal constitutional standards. A lack of jurisdiction precludes the Court from addressing the merits of the government’s case, and all that remains is for the Court to dismiss the case. As well, the term “agent”, as a jurisdictional basis to prosecute a foreign national, is so vague that it denies a defendant the “due process” that the federal Constitution mandates.
The Court concludes that neither the FCPA nor the MLCA extends criminal liability to a foreign national located outside the United States, except in the specific circumstances where the agency relationship is established in the United States. See Hoskins I, 902 F.3d at 89 (citing to United States v. Bodmer, 342 F. Supp. 2d 176, 188 (S.D.N.Y. 2004)). Therefore, Counts One, Two and Three of the … Indictment are dismissed, with prejudice, as to the defendant, Daisy T. Rafoi-Bleuler for lack of jurisdiction.”
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